Hurricane Irma hit Florida over the weekend, leaving about 60% of the state without power. While there will certainly be a short-term impact on the economy, one research firm estimated damages of $49 billion.
This hurricane - combined with the economic impact from Hurricane Harvey in Texas just two weeks ago - will likely affect some data that measures the overall economy, such as the number of people unemployed and the earnings for some companies. The September jobs report (that comes out Friday, October 6th) could see the unemployment rate temporarily spike, and the report could also show the number of monthly new jobs fall because of the mass power outages and evacuations. There may also be a drop in retail sales due to lost selling days and a spike in the number of people filing for unemployment benefits. These economic impacts will likely be temporary because the rebuilding efforts usually happen quickly. Economists have not changed their Gross Domestic Product (GDP) estimates with most expecting the third quarter (July through September) to grow around 2.5%.
On a side note, Wall Street investors breathed a sigh of relief as President Donald Trump and Democrats agreed to extend the debt ceiling and fund the government through December 15th. Also included in this agreement was Hurricane Harvey relief funding for Texas and Louisiana. It's likely that the Treasury department will be able to build enough cash reserves so the government is funded into March even if the December debt ceiling is not extended again. Perhaps it’s possible this agreement will lead to future political cooperation on tax reform and infrastructure spending.
The Simply Money Point
Hurricanes are clouding our country’s economic picture in the short run, but the longer-term trend for economic data remains strong. Investors, like you, should continue to remain confident in your investments and your personalized financial plan.